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Chapter 8: Entrepreneurial Strategy and Competitive Dynamics
Transcript of Chapter 8: Entrepreneurial Strategy and Competitive Dynamics
Recognizing Entrepreneurial Opportunities
New value can be created in:
The creation of new value by an existing organization or new venture that involves the assumption of risk.
How Do Start-Ups Start?
Established firms identify a need
Current or past work experiences
Hobbies that grow into businesses or lead to inventions
Suggestions by friends or family
Needs of existing customers
Suggestions by suppliers
Technological developments that lead to new advances
The Majority of entrepreneurial start-ups are financed with
A. Bank financing
B. Public financing
C. VC financing
D. Personal savings & the contributions of family, friends, & fools.
1. Discovery Phase
The process of becoming aware of a new business concept
May be spontaneous & unexpected
May occur as the result of deliberate search for new venture projects
Characteristics of good opportunities
Most Entrepreneurial Resources
Human Capital - Intelligent & educated people with great relevant job experience & knowledge
Social Capital - Quality derived from network relationships & "serendipitous interactions" (ATV)
2. Opportunity evaluation phase
* Analyze the opportunity
Talk to potential target customers
Discuss it with production or logistics
Conduct feasibility analysis
Entrepreneurial Leaders Must Be...
Vision may be the most important asset
The ability to envision realities that do not yet exist
Able to share with others
To achieve excellence, entrepreneurs must...
Know the customer
Provide quality products & services
Pay attention to details
Surround themselves with good people
new ventures can be launched in 3 ways:
Pioneering new entry:
A firm's entry into an industry with a radical new product or highly innovative service that changes the way business is conducted.
* Best way to make significant profits (practically no competition)
Imitative new entry
A firm's entry into an industry with products or services that capitalize on proven market successes & that usually has a strong marketing organization.
* A way for entrepreneurs to capitalize on market success
* Disadvantage - easy for competitors to copy
Adaptive new entry
A firm's entry into an industry by offering a product or service that is somewhat new & sufficiently different to create value for customers by capitalizing on current market trends.
* Allows new or slightly different product or service
* If it can add value, it can be very successful
* Overall Cost Leadership
Promotes simple, organizational structures
Allows to make timely decisions that affect cost
- Use of new technology
- Deploy resources in a radical new way
- Niche strategies that fit the small business mold
A firm's awareness of its closest competitors & the kinds of competitive actions they might be planning.
* Helps to continuously remind what is your competitive advantage?
Types of Competitive Actions
* Strategic Actions
--> Major commitments of distinctive & specific resources to strategic initiatives. "Where actions align with goals"
* Tactical Actions
--> Refinements or extensions of strategies usually involving minor resource commitments.
5 reasons why Atlanta is great start-up city & a hotbed for innovation & growth:
Likelihood of Competitive Reaction
* How a competitor is likely to respond will depend on three factors:
1. Market dependence
2. Competitor's Resources
3. The reputation of the firm that initiates the action
Choosing Not to React
A firm's choice of not reaching to a rival's new competitive action.
A firm's strategy of both cooperating & competing with rival firms.
"Don't compete, cooperate!" sometimes you can work with your competitors, not just against them
Atlanta was one of the top 10 cities for tech company acquisitions in 2012!
Ranking was based on local resources, culture, atmosphere and overall appeal to twenty-somethings to open shop for a new company.
Atlanta was ranked No. 1 among medium-sized cities for young entrepreneurs in 2013
With affordable housing & a low cost of living, Atlantans get more & spend less.
For 3 years in a row, Atlanta is the #1 place in the country people moved to.
Encompassing $304 billion, the Atlanta metro area is the 8th largest economy in the country & 17th largest in the world.
Atlanta contains the country's 3rd largest concentration of Fortune 500 companies including...
Coca-Cola, Home Depot, Delta, AT&T & UPS